Wright Medical shares rise on Q2 beat

Shares in Wright Medical (NSDQ:WMGI) rose yesterday after the medical device maker beat expectations on Wall Street with its 2nd quarter earnings results.

The Amsterdam-based company posted losses of $41.2 million, or 39¢ per share, on sales of $179.7 million for the 3 months ended June 25, seeing losses shrink 82.1% while sales grew 5.3% compared with the same period during the prior year.

Adjusted to exclude 1-time items, losses per share were 7¢, just ahead of the 9¢ loss per share consensus on The Street, where analysts were looking for sales of $178.2 million for the quarter.

“All of our most important financial results are right on track with our plan for the year.  We also continued to make significant progress in the second quarter on the initiatives that will enable us to achieve our longer term goals.  Global net sales growth of 5%, including expected dis-synergies, adjusted EBITDA of $19.8 million and gross margins of 78.8% reflect the strength of our markets and our unique position in them.  We believe we are well positioned as we head into the back half of the year to accelerate our business momentum. Highlights in the quarter included 16% sales growth in U.S. shoulders, driven by strong contributions from the ongoing rollout of our Simpliciti shoulder system, as well as the launch of our Perform Reversed glenoid, which is off to a terrific start.  We anticipate that our Perform Reversed launch will drive accelerating revenue in the second half of the year as we deliver additional instrument sets to the U.S. field.  In our U.S. lower extremities and biologics business, we saw outstanding growth of 32% in the most technologically advanced portions of our portfolio, which include Augment bone graft, Salvation limb salvage and total ankle replacement.  We also launched our Invision total ankle revision system in July and believe the combination of Invision, our continuum of care total ankle replacement portfolio and significantly improved reimbursement could create a tipping point in the adoption of total ankle replacement. Growth in the core U.S. lower extremities and biologics portfolio was significantly lower than our more technologically advanced products, partially due to the revenue dis-synergies in the quarter, which we anticipated.  As previously announced, we completed the hiring and training of approximately 100 sales representatives in our U.S. lower extremities business in the quarter.  We expect to see some benefit from these rep adds beginning in the 3rd quarter and meaningful benefit in the 4th quarter and beyond as the expanded footprint, greater focus on the core product portfolio and greater incentives to drive growth begin to take effect,” prez & CEO Robert Palmisano said in a press release.

Wright Medical reiterated its fiscal year 2017 guidance, expecting to post revenues between $755 million and $765 million and non-GAAP losses per share of between 33¢ and 26¢.

“We are right on track with the key revenue growth drivers for 2017, and remain confident in our full-year revenue guidance of $755 million to $765 million and full-year adjusted EBITDA guidance of $78.5 million to $85.5 million.  We continue to expect there will be strong acceleration in the 2nd half of the year as we annualize the impact of the merger revenue dis-synergies and begin to realize the benefits from an expanded U.S. sales force and new product launches.  In addition, I believe we are positioned well for future success and achieving our key financial goals of mid-teens constant currency net sales growth, gross margins in the high 70% range and non-GAAP adjusted EBITDA margins of approximately 20% in the next one to two years,” Palmisano said in a prepared statement.

Shares in Wright Medical have risen 8.7% so far today, at $28.27 as of 11:45 a.m. EDT.

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